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COMMENT
Paradoxical
panacea
"To European eyes, the
capacity-strapped American
industry must look like the
rainbow's pot of gold.
Alas, it is not."
In cancelling the orders for the last 33 Tor nado strike and air-defence aircraft it was due to receive, Britain has done more than merely hasten the run-down of a particular
military programme. It has confirmed the suspi
cion that in Europe as much as anywhere else in
the world, a confirmed military order is now no
guarantee of future work. To be bidding on a
major new military programme like EFA is no
more of a sinecure
than it is. for an
American to be bid
ding on an ATF. In
military, matters
there are always
winners and losers;
in this game there
will be more of the
latter than of the
former.
To have a fac
tory full to capac
ity on a civil pro
gramme like Air
bus is the nearest
thing to security at
the moment; but to
be seeking to fill a
factory with such
work is not.
Even in a world
with major civil pro
grammes running
late and with order-books stretching to unprece
dented levels, there are too few orders for too
many aerospace companies.
To many military manufacturers, the Western
equivalent of the Soviets' swords-into-plough-
shares Konversyia must seem an irresistable pana
cea. Most of the Western civil aircraft manufac
turers, such as Boeing, McDonnell Douglas, Air—
bus, Fokker, ATR and the rest, are trying to
increase production to match those unprecedented
orders. Most are failing to meet target dates and
promised production levels, and could well do
with extra production capacity.
To European eyes, especially, the capacity-
strapped American industry must look like the
proverbial rainbow's pot of gold. Alas, it is not.
The USA has, for many years, been the West's
biggest military producer, and is now sustaining
the West's biggest military cuts. By definition,
therefore, it has the biggest surplus capacity to
offer the civil manufacturers. Companies like
Lockheed have laid out their stalls already, and
they have much to offer. Lockheed has the skills
to build large aircraft in large numbers, as the C-5
and C-141 bear witness. Its Georgia plant could
easily build the fuselage of Boeing's mooted 777,
or of McDonnell Douglas' planned MD-12, just as
it could have assembled Airbus A321s or Fokker
100s. It is not alone; from General Dynamics to
Rockwell there is capacity available.
Even some of those who seem short of civilian
capacity have surplus military capacity - but in
some cases may not be able to exploit even that.
McDonnell Douglas is the prime example of this
paradox — late with its MD-11, yet laying off
workers and shrink
ing capacity in an
effort to cut a mas
sive $700 million a
year from its oper
ating costs. So the
companies most in
need of the availa
ble capacity might
not be able to af
ford it.
Then, for those
sub contract-hun
gry Europeans in
particular, they
may just not be of
the right political or
financial hue. If Boe
ing is to put out
work on its 777, its
financial first ten
dency must be to
give that work to
its Japanese part
ners who are putting up a share of the launch
costs. Politically, it may be unwise of such a large
American company to be seen to be placing work
offshore when American workers are being laid
off and famous, established plants being closed.
Some European companies have proved that
they can break into the civil sub-contract market
in the USA —Aeritalia, Shorts and Westland are
three shining examples — but there is not going
to be a flood of such work. There will continue to
be offset work placed in Europe by Americans,
but there will be less of it as the Europeans buy
less American military equipment.
For British Aerospace's military division and its
Panavia partners, searching for work to replace
those lost Tornados, the USA may not provide
easy pickings. Even for Americans it may not, if
the big manufacturers cannot afford to buy the
sub-contract services they offer.
A company suchas McDonnell Douglas, trying
to support the huge cash outflows of its fixed-
price military programmes and the development
costs of its MD-11, MD-12 and MD-90 airliners
with little but the cash inflow of sales of the
existing MD-80, cannot afford to be the cavalry
riding to the rescue of erstwhile rivals. •
FLIGHT INTERNATIONAL 27 June - 3 July 1990